Germany’s Federal Ministry of Finance has started a public consultation aimed to gather feedback about the introduction of tokenized mutual fund shares.
It will be possible to submit comments until Oct. 1, 2021.
The draft regulation makes allows investment funds to issue tokenized units on the blockchain.
Its authors warn that the German financial industry could be at a disadvantage when other European jurisdictions turn to tokenization.
A token represents a certain number of shares of a regulated fund. Tokenization offers plenty of benefits such as the ability to reduce the barrier to entry and cutting down the administrative costs associated with new investors.
The move to introduce tokenized mutual funds is the latest sign that blockchain and cryptocurrencies have acquired the veneer of legitimacy in the richest E.U. country.
A new German law, which came into force on Aug. 2, allowed institutionally oriented funds to invest up to 20 percent of their total holdings into crypto.
Frankfurt-headquartered asset manager Union Investment had announced that it would add Bitcoin to various funds after performing a pilot test earlier this year.